BMW profit up on lower taxes but revenue slips

FriedrichGeiger

FRANKFURT--BMW AG's (BMW.XE) profit rose in the third quarter due to lower tax payments, but revenue slipped slightly in a challenging market environment, the German car maker said Tuesday.

Net profit rose 3.1% on the year to 1.32 billion euros ($1.78 billion) as income tax declined by EUR29 million. Earnings before interest and tax, however, declined 3.7% to EUR1.93 billion amid high expenditures for new technologies, increased personnel costs and growing competition, said the world's largest premium car maker by revenue.

BMW's weakening operating earnings show that the race for technological supremacy among the three leading luxury car brands is hampering their returns. Audi's profit also declined due to high upfront expenditures for new technologies and models, and profitability of Daimler's Mercedes-Benz cars unit, albeit rising, lagged its two larger peers amid high investments.

The company confirmed its full-year targets and continues to aim for a pretax profit on a similar scale to 2012 and sales volume growth in the single-digit percentage range.

"Despite some signs of stabilization on European car markets, economic conditions in many markets are likely to remain volatile and challenging in the coming months," said the company. The world's car markets are set to grow 4.1% this year, it noted.

BMW currently spends a higher share of revenue on investments than usual, due to expenditures for the launch of its all-new i3 electric model and the development of new conventional models. In addition, the company is expanding its overseas production facilities to mitigate the impact of exchange rate fluctuations and customs duties.

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